How “Rules of Thumb” can Corrupt your view of your Business Value.
“My business is worth $400,000!” How do you know? You just read an article that said that businesses in your industry were worth “2 times revenue”.
The problem, your business with $200,000 in revenue ($200k x 2=$400k) has lost money every year for the last five. Guess what? Your business isn’t worth $400,000, in fact in might not be worth anything.
Rules of thumb can be helpful, but almost never for understanding what your business is really going to be able to sell for.